Government Announces More Details About Direct Tax Debt Recovery

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July 13th 2020
Tax Week 15
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Government Announces More Details About Direct Tax Debt Recovery

HMRC issues further safeguards to reassure public on direct tax recovery powers

More information has been disclosed about the Government's DRD powers, especially safeguards employed to protect vulnerable taxpayers.

Direct Recovery of Debt allows HMRC the power to raid bank, ISA or building society accounts to collect debts of at least £1,000 related to unpaid tax or tax credit repayments. It is estimated 17,000 cases per year will be subject to the new powers and will bring in £100 million per year in collections.

HMRC invited comments from interested parties back in May related to this and have today published further proposals to highlight how these powers will be used.

Prior to accessing bank accounts, HMRC will have to:

  • Visit the debtor face-to-face in order to establish a definite contact and provide the opportunity to discuss alternative collection measures such as payment plans.
  • Create a specialist division within HMRC to deal with individuals identified as vulnerable and man a special helpline for those identified.
  • Allow any DRD action to be challenged via appeal in the County Court.
  • Double the amount of time a bank account is frozen before money is taken (now 30 days).
  • Make sure a minimum of £5,000 remains within the debtors account. This ties in with the average debt collected being around £5,800 from accounts with more than £20,000 deposited.
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